Which of the Following Best Explains Why Airlines Often Cut

question 152

Multiple Choice

Which of the following best explains why airlines often cut their ticket prices at the last-minute in order to fill the remaining empty seats on their flights?

• A) Fixed costs in the airline industry are very large, but the marginal cost of flying one more passenger is very low.
• B) Airlines receive a subsidy from the government for each flight that is fully booked and departs on time.
• C) The Civil Aviation Authority ranks each airline based on the percentage of flights that are fully booked. These rankings affect the decisions of firms to use a particular airline to fly their employees to business meetings.
• D) Cutting prices makes the airlines more popular with their customers, who may fly with the same airline in the future as the result of buying low-price tickets.

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Definitions:

Yeast

A group of unicellular fungi that are important in the fermentation process and as model organisms in biological research.

Zygospores

Thick-walled resting spores formed by the fusion of cells from different mating types of certain fungi and algae, leading to genetic recombination and dormancy.

Dikaryotic Cell

A cell having two separate nuclei, each with one set of chromosomes, often found in the fungal life cycle during sexual reproduction.

Diploid Zygote

A fertilized egg cell that possesses two complete sets of chromosomes, one from each parent, resulting in a diploid organism.